Luxury Shares Soar in Europe as LVMH Sales Rebound -- 2nd Update
By Stacy Meichtry
PARIS -- Shares across Europe's luxury-goods sector hit record
highs Wednesday after LVMH Moët Hennessy Louis Vuitton SE reported
a strong rebound in first-quarter sales, defying the pandemic's
drag on the global economy.
Shoppers in China and the U.S., where a rapid vaccine rollout
has led to eased restrictions, are fueling strong demand for
leather goods at Louis Vuitton, Dior and other brands owned by
LVMH. Sales at LVMH reached 14 billion euros, equivalent to $16.75
billion, over the first three months of 2021, a 30% increase
compared with a year earlier, stripping out the effect of currency
changes and its acquisition of U.S. jeweler Tiffany. The
first-quarter sales were 8% higher than the same period in 2019,
before the pandemic.
LVMH's status as a bellwether of the luxury industry helped lift
shares across the sector to all-time highs on Wednesday. LVMH
shares increased 3.2% to EUR614, Gucci parent Kering SA rose 2.7%
to EUR644 and Cartier owner Compagnie Financière Richemont SA
jumped 3% to 96.68 Swiss francs.
LVMH's market value rose above EUR300 billion this week for the
first time, solidifying its status as Europe's most valuable
company, ahead of consumer-goods giant Nestle SA and pharmaceutical
company Roche Holdings AG, as well as the continent's oil majors
The pandemic is accelerating a shift in stock-market fortunes as
the luxury business eclipses sectors that were once at the core of
the European economy. Banks are struggling to adapt to new
post-financial-crisis regulations. Auto makers are grappling with
new regulations aimed at slashing carbon emissions. Big oil
companies are subject to the whims of turbulent energy markets.
LVMH, which owns 75 brands, has created a mass market for luxury
by selling goods with a range of prices that can attract consumers
who vary in age and income. Louis Vuitton sells leather goods
starting at a few hundred dollars as well as handbags that cost
thousands. A bottle of Hennessy cognac, meanwhile, sells for as
little as $25.
When the pandemic gripped Europe last year, a freeze in
international travel had investors worried the luxury sector was
heading for dire straits. LVMH and other luxury behemoths have long
relied on tourist traffic in fashion capitals around the world to
drive their sales. Chinese shoppers that once arrived by the
busload vanished from boutiques in Paris and Milan. Since then,
Europe's sluggish vaccine rollout has resulted in the return of
lockdown restrictions in France, Italy and other parts of the
LVMH, however, has largely managed to shrug off the pandemic's
impact in Europe due to its expansion in China and the U.S. In
recent years, the luxury giant has worked to expand its e-commerce
operations and open new stores in China and beyond, making it less
dependent on Europe.
LVMH said its first-quarter sales in Asia, excluding Japan,
increased 86% compared with the same period last year and 26% from
the first quarter of 2019. In the U.S., sales rose 23% compared
with the first quarter of 2020 and 15% from the first three months
"There was clearly a benefit from accelerating U.S. demand
supported by recent stimulus," wrote analysts at Hamburg-based
Louis Vuitton and other LVMH brands are also better at
weathering economic turmoil because they specialize in handbags and
other leather goods that are less sensitive to fashion trends.
Stripping out currency swings, sales in LVMH's fashion and
leather-goods division rose 52% from a year earlier to EUR6.7
billion in the first quarter.
The company's wines and spirits unit, which includes Hennessy
cognac and Moët & Chandon Champagne, logged a 36% increase
while its jewelry and watches business rose 35%, stripping out the
effects of the Tiffany acquisition.
--Olivia Bugault contributed to this article.
Write to Stacy Meichtry at email@example.com
(END) Dow Jones Newswires
April 14, 2021 10:22 ET (14:22 GMT)
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